Marginal Rate of Substitution, economics homework help

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What is the marginal rate of substitution (MRS) and why does it diminish as the consumer substitutes one product for another? Use examples to illustrate.

Guided Response:
In 300 words or more, please, provide your response to the above discussion question. Find two goods from your own consumption basket and explain how the MRS changes for the two products as you substitute one for the other. Respond substantively to at least two of your classmates’ postings. Substantive responses use theory, research, and experience or examples to support ideas and further the class knowledge on the discussion topic.

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Running head: MARGINAL RATE OF SUBSTITUTION

Marginal Rate of Substitution
Institution Affiliation
Date

1

MARGINAL RATE OF SUBSTITUTION

2

The marginal rate of substitution is a situation whereby a customer foregoes one product
in order to prioritize another commodity which serves the same purpose (Gans, et al., 2011). It is
applied in indifferent theory to conclude on the customer reaction toward the goods. The
marginal rate of...

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